You are using an old machine with a remaining life of 3 years. This old...
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You are using an old machine with a remaining life of 3 years. This old machine is costing you $5,000 each year to operate. You can replace the machine with a new one at the initial cost of $25,000. The cost of operating the new machine is expected to be $3,000 each year. The new machine has a life of 7 years. With the discount rate of 12%, should you replace the machine now or wait?
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